Suppliers on test

At MAN, all the signs point to sustainability. The company is not just relying on electric motors and climate-friendly vehicle production – MAN’s suppliers and their suppliers in turn are all expected to contribute towards better protection for the environment and better working conditions. MAN wants to motivate its business partners to strive to be more sustainable on their own initiative. “Our aim is to win our suppliers over to the topic and to encourage them to optimise their own supply chains too,” says Xaver Langlechner, Team Coordinator Sustainability in Supplier Relationships at MAN.

MAN takes responsibility for copper and natural rubber within the Volkswagen Group

The focus is on 16 critical raw materials identified by the Volkswagen Group and regarding which activities have been published in its Responsible Raw Materials Report. MAN is responsible for copper and natural rubber, because VW has delegated central responsibility for these critical raw materials to individual subsidiaries. “We take care of risk management, communication and reporting for these two raw materials across the Group and would like to utilise as many synergies as possible within the Volkswagen Group in the process,” says Langlechner.

Copper is already something that can’t be ignored in the commercial vehicle industry. It has become all the more significant in the course of electrification. More than 800 suppliers provide MAN with components that contain copper. Demand is set to rise steeply as part of the transition to e-mobility: an electric truck from MAN contains at least twice as much copper as the previous diesel model. This is primarily due to the electric motors, as well as cabling.

There is another reason too, why copper is an extremely important material: it can be recycled limitlessly with almost no loss of quality. This gives it a key role on the road to a circular economy. However, at the same time, copper has its dark side: it is primarily extracted in Latin America, but there are also mines in Congo. There, explains MAN sustainability manager Bernd Moßhammer, there is a risk of inhumane working conditions. Copper mining can also cause harm to workers’ health and the environment. The metal is often processed in China, which further raises concerns regarding respect for human rights.

Partnering with The Copper Mark

All that is why MAN has set itself the goal of achieving maximum transparency throughout the entire supply chain, which is a significant challenge for many sub-suppliers. “We can’t check each individual mine ourselves,” says Langlechner ruefully. That’s why MAN has not only been a member of the Advisory Council since October 2022, but also an official partner of The Copper Mark.

Tech giants Google and Amazon are also involved in this international initiative, which seeks to make the mining and production of copper more sustainable. To achieve that, it monitors the supply chain for the metal – from mine to processing. It also awards certificates to exemplary mines and responsible suppliers on the basis of clearly defined criteria. MAN is the first European commercial vehicle manufacturer to have joined The Copper Mark scheme. The company also has a seat on the advisory council as a partner, taking an active role. Furthermore, MAN encourages its suppliers to join the initiative and gain certification themselves.

S-Rating is a key criterion for awarding contracts

There are also other ways in which MAN imposes obligations on its suppliers. One of the most important evaluation tools is the S-Rating, which was introduced at the end of 2020 and is also used by other marques within the VW Group. This is a sustainability rating, covering all three ESG criteria: Environment, Social and responsible corporate Governance. Under the latter category, for example, the scheme checks whether suppliers consistently prevent corruption. On the basis of a questionnaire, suppliers must provide evidence that they have implemented all the sustainability requirements imposed by MAN in their own companies. And they must pass these obligations to their own suppliers in turn.

The S-Rating is an essential criterion for MAN when it comes to awarding purchase contracts. If there is any suspicion that a supplier has provided false information or has failed to fulfil MAN’s requirements, MAN will undertake pre-announced sustainability audits. These will check whether the information provided corresponds to the truth. Should any inconsistencies be revealed, the supplier may slide down the rankings and, in the worst case, may lose MAN as a customer. Even legal action is a possibility.

Online complaints portal created

97 per cent of MAN’s direct suppliers are based in Europe or Turkey. Because regulations are strict, at least within the EU, it is rare for serious violations such as environmental pollution to occur. Nevertheless, MAN is vigilant on this and checks, for example, whether occupational health and safety regulations are upheld in the suppliers’ production facilities. Employees of a supplier and their business partners can also submit complaints about issues such as their working conditions via an online portal.

To enable early identification of risks throughout the supply chain, MAN uses artificial intelligence. A business partner scans for negative media reports and social media posts concerning the relevant supplier on behalf of the VW Group and its marques. This allows MAN to identify relevant risks at an early stage and actively manage them.

Sustainability as a selling point

“The subject of sustainability in procurement has developed an incredible dynamic at MAN over the last few years,” says Moßhammer in summary. And it’s becoming ever more important from an economic viewpoint too. Langlechner believes that sustainability in supplier relationships has become a key selling point for the sale of MAN electric buses. He assumes that this trend is likely to only become stronger with the advancing transition to e-mobility, because when it comes to electric trucks and buses, suppliers play a greater role in the overall emissions of the vehicle due to the batteries.